Insmed Incorporated's (NASDAQ:INSM): Insmed Incorporated, a global biopharmaceutical company, focuses on the development and commercialization of therapies for patients with serious and rare diseases. With the latest financial year loss of -US$324.3m and a trailing-twelve month of -US$292.9m, the US$2.1b market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on INSM’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for INSM’s growth and when analysts expect the company to become profitable.
Consensus from the 9 Biotechs analysts is INSM is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$288m in 2022. So, INSM is predicted to breakeven approximately 2 years from today. How fast will INSM have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of INSM’s upcoming projects, however, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with INSM is its debt-to-equity ratio of 109%. Typically, debt shouldn’t exceed 40% of your equity, which in INSM’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on INSM, so if you are interested in understanding the company at a deeper level, take a look at INSM’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:
- Valuation: What is INSM worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether INSM is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Insmed’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.